7:08 PM, December 5, 2012

State Treasurer Andy Dillon talks to the news media after meeting with Detroit Mayor Dave Bing, the Detroit City Council and Deputy Mayor Kirk Lewis about an emergency financial manager for the city on Wednesday, Dec. 5, 2012. / KIMBERLY P. MITCHELL/Detroit Free Press

State Treasurer Andy Dillon told Detroit city officials today that he expects to begin a 30-day review process next week to appoint an emergency financial manager to oversee the city’s disastrous finances, saying efforts to stabilize Detroit have done little to avert a cash crisis.

Dillon told the Free Press he could begin the process, required by state law, as early as Monday. He spent the day in Detroit meeting with the Bing administration and City Council members, outlining concerns that the city is burning through cash far more quickly than anyone anticipated and with little sign of progress in reducing its employee costs, let alone in tackling its enormous long-term debt obligations.

“We’ll very likely next week start the review under Public Act 72, as…allowed under the agreement” between the city and state, he told Free Press columnist Rochelle Riley.

Council President Pro Tem Gary Brown said Dillon told him early this afternoon that the state is preparing to send an emergency financial manager.

Brown said that, in theory, the city has five weeks to convince Dillon and Gov. Rick Snyder that city leaders can manage the crisis themselves.

“But we — and I mean, the mayor and council together — have shown that we don’t have the political will to do what needs to be done,” Brown said, “so somebody else will do it for us.”

When asked why the state is pulling the trigger on an emergency manager at this time, Brown repeated, “Cash burn is what’s driving this whole issue."

A ranking city official who spoke on condition of anonymity said he spoke with Dillon by phone this morning and was told that the Bing administration’s inability to fix Detroit’s immediate cash crisis and enact major financial reform gave the state no choice.

The conversations appeared to give the city only one way out: through approving a series of changes Bing’s administration said it would negotiate with the council before its next meeting, on Tuesday.

Bing, whose spokesman would not comment today, said in a conference call with the news media Tuesday that the city is “at a point now where I don’t think we can cut any more without negative impact on the city’s services.”

His administration pledged a breakneck round of negotiations to fix the city’s cash crisis, but officials who spoke with Dillon today said the treasurer appeared to be giving Bing and the council an ultimatum: implement changes immediately or risk the appointment of a financial manager.

The officials said Dillon told them he believed Detroit was out of time and that inaction and disputes between Bing and the council left him no choice but to prepare for more state intervention.

The appointment of an emergency financial manager would be different from appointing an emergency manager. The EFM position exists under Public Act 72. The EM position was created under Public Act 4, which voters repealed Nov. 6.

The ranking city official told the Free Press that Dillon told him: “In about a month’s time, they’ll have everything together. He said they won’t let payless paydays happen” and that the state would help the city meet payroll and pay bills while the emergency financial manager implemented tough changes. He said Dillon said the EFM could turn around the city's finances in about a year.

Several other people with knowledge of the conversations said the state’s frustration over Detroit’s inability to wrest savings from cuts was exacerbated by the Bing administration's admissions that Detroit’s cash crisis is worsening by the day. At last count, Detroit was projected to be nearly $47 million short of money it will need to pay employees and its bills and debts by June 30.

Discussions were ongoing this afternoon.

Bing's administration declined comment. Representatives for Snyder and Dillon said they were unable to comment immediately.

Treasury spokesman Terry Stanton told the Free Press that an appointment of an emergency financial manager was not imminent. Stanton confirmed that Dillon was meeting with city officials today, but he declined to discuss details.

Stanton said the state has received reports about the city’s deteriorating financial condition and called the situation “worse than expected.”

Dillon has “heard growing concerns from these discussions with members of the financial advisory board and others in the city about the city’s near-term ability to meet its financial obligations and its long-term viability,” Stanton said. “We can’t take the potential of an emergency financial manager off the table, but we are continuing to have discussions with the city and will continue to work cooperatively.”

Mayor Dave Bing's office declined to discuss today's talks but issued a statement saying the mayor's administration "has had discussions with the State regarding an emergency financial manager previously. Until the state makes a final determination, I will continue to implement my restructuring plan on behalf of the citizens of Detroit.”